33  2. 


GREENBACKS,  SHERMAN  NOTES  AND 
SILVER  CERtlFICATES. 


BY  EDWARD  ATKINSON. 


The  writer  lately  made  the  attempt  to  put  the  monthly  statement  of  the 
national  debt  in  a true  form.  The  monthly  statement  which  is  issued  by 
the  Secretary  of  the  Treasury  is  not  in  a true  form.  He  cannot  make  it  so 
because  existing  laws  compel  him  to  count  as  cash  a part  of  the  demand 
notes  which  have  been  paid  in  coin  or  redeemed  by  being  paid  into  the 
Treasury  for  taxes.  These  notes  are  not  cash.  They  are  paid  notes.  Any 
private  corporation,  merchant  or  firm  who  should  make  up  his  accounts  in 
such  a way  would  be  regarded  as  a dishonest  and  disreputable  person,  unfit 
to  be  trusted.  His  credit  would  be  gone  if  he  submitted  a statement  to  any 
bank  or  trust  company  from  which  he  desired  a loan,  in  which  he  counted 
his  own  paid  notes  as  cash  assets.  The  principle  of  law  and  the  common 
practice  are  the  same.  A paid  note  is  a dead  note;  in  legal  form  it  is 
“functus  officio.  ” The  only  true  entry  that  can  be  made  when  such  a note 
has  been  redeemed  and  paid  is  to  charge  it  oil  to  notes  payable  and  thereby 
reduce  outstanding  liabilities.  If  such  a note  is  put  out  again  it  works  a 
new  act  of  borrowing.  It  is  evidence  that  another  loan  has  been  made  by 
the  promisor.  A reissue  of  such  a note  is  not  a continuation  of  a former 
loan;  it  is  another,  separate,  distinct,  new  loan.  It  matters  not  whether  the 
same  piece  of  paper  is  used  or  not.  Bank  notes  which  have  once  been  in 
circulation  and  which  have  been  paid  by  the  bank  are  used  over  again.  But 
no  bank  officer  or  director  would  ever  pretend  that  although  the  same  piece 
of  paper  is  used  over  again  after  having  been  redeemed  it  is  not  a new  trans- 
action ; a new,  separate  and  distinct  obligation  from  any  previous  issuer  of 
such  note. 

Again,  the  first  war  issue  of  a promise  to  pay  to  the  borrower  one  or 
more  dollars  by  the  United  States  was  an  act  of  borrowing.  The  first  issue 


of  demand  notes,  which  were  made  for  the  conduct  of  the  war,  were  not  a 
legal  tender.  The  creditors  who  took  them  willingly  lent  their  money  to 
the  United  States  on  its  promise  to  pay.  Soon  after,  the  Government 
needed  to  borrow  much  larger  sums.  It  was  believed  that  the  people  would 
not  loan  the  money  unless  they  were  forced  to  do  so  ; in  order  to  make  a 
forced  loan  Congress  authorized  the  Secretary  of  the  Treasury  to  issue 
what  are  known  as  greenbacks,  making  them  a legal  tender  between  man 
and  man.  That  act  of  borrowing  worked  .a  forced  loan.  Many  men  who 
had  goods  to  sell  which  the  Government  needed  for  the  conduct  of  the 
war  were  indebted  to  other  parties.  The  Government  said  : “ Sell  me  these 
goods.  We  cannot  pay  you  in  c ^ We  will  give  you  notes  promising 
payment  in  coin  at  a later  date  whoever  we  can  pay  them.  We  will  make 
these  notes  a legal  tender.  Y(  u can  then  force  your  creditors  to  take  them 
in  liquidation  of  your  own  debts  to  them,  and  if  they  refuse  they  will 
forfeit  their  whole  claim  upon  you.  ” In  this  way  the  Government  collected 
a forced  loan  of  more  than  four  hundred  million  dollars  ($400,000,000). 

These  notes  depreciated.  After  the  war  the  Government  began  to  fund 
the  notes  in  interest-bearing  bonds.  A hue  and-cry  was  made  against  an 
alleged  contraction  of  the  currency.  The  right  to  convert  the  notes  into 
bonds  was  taken  away,  and  the  power  to  pay  the  notes  or  redeem  them  and 
cancel  them  was  also  taken  away  from  the  Secretary  of  the  Treasury.  That 
did  not  alter  the  fact  that  these  notes  are  evidence  of  a debt  due  from  the 
Government.  People  may  be  willing  to  take  them  as  lawful  money  so  long 
as  they  aie  redeemed  in  gold.  The  power  to  redeem  them  in  gold  has 
lately  been  doubted,  yet  no  man  could  have  refused  them  when  offered  by 
his  debtor  to  himself.  They  are  reissued  by  the  Treasury.  Every  reissue 
is  a new  transaction  ; it  is  the  collection  of  a new,  a forced  loan,  without 
warrant  except  under  a fiction  of  law,  without  necessity  and  at  a heavy 
cost— because  this  fiat  money  creates  a constant  distrust  both  in  this 
country  and  in  foreign  countries. 

Under  the  so-called  Bland-Allison  Act  the  Government  collected  a sec- 
ond forced  loan  for  the  purchase  of  silver  bullion.  The  gold  was  bought 
by  the  Government ; it  was  paid  for  in  legal-tender  notes  or  other  obliga- 
tions of  the  Government,  which  the  owners  of  the  silver  bullion  then  forced 
off  upon  the  public  under  the  provisions  of  legal  tender.  The  silver  was 
coined  into  dollars  and  those  dollars  were  made  a legal  tender  at  their 
“ nominal  value.”  Those  are  the  words  of  the  law.  They  are  not  worth 
their  face  value.  They  have  varied  and  fluctuated  in  their  bullion  value 
and  are  now  worth  about  half  their  face  value  and  about  two-tliirds  what 
they  cost  the  Government.  The  mass  of  the  people  will  not  take  them  except 
when  forced  ; but  being  legal  tender  they  can  be  forced  by  a debtor  upon 
any  one  of  his  creditors. 

The  thir  1 forced  loan  was  collected  under  the  Sherman  Act ; under 
this  Act  a little  over  one  hundred  and  fifty  million  dollars  ($150,000,000)  of 


3 


debt  was  incurred  by  the  Government,  payable  on  demand,  for  which  legal 
tender  notes  were  issued  with  a provision  in  the  Act  that  these  notes  “ may 
be  reissued  ” by  ihe  Treasury.  The  reissue  of  these  notes  are  not  compul- 
sory. The  greater  part  of  of  that  bullion  lies  dead  in  the  Treasury  ; it  is 
unavailable  and  unsalable,  but  the  notes  have  been  presented  in  large  sums 
for  payment.  A very  large  amount  has  been  paid  ; they  have  been  paid  in 
gold  because  in  no  other  way  could  their  parity  be  maintained.  These 
notes  are  not  under  a mandate  of  Congress  for  their  reissue.  The  Secretary 
of  the  Treasury  may  treat  these  notes  at  his  discretion  under  the  general  prin- 
ciples of  law  ; the  general  principle  of  the  law  of  the  Unites  States  is  that  the 
Secretar, i of  the  Treasury  cannot  make  a loan  or  do  a single  act  of  borrow- 
ing except  under  an  Act  of  Congress  specifically  given  for  a definite  pur- 
pose. There  is  no  Act  of  Congress  anti  there  is  no  appropriation  under 
which  the  legal  tender  demand  Treasury  riotes  issued  under  the  Sherman 
Act  can  be  again  put  out  or  reissued  after  they  have  been  once  paid  in 
coin. 

The  writer  has  been  rebuked  for  telling  the  truth  and  for  printing  a true 
statement  of  the  National  debt.  Even  some  of  the  advocates  of  a sound 
and  safe  monetary  system  seem  to  think  that  there  is  something  discreditable 
to  the  Government  in  calling  the  greenbacks  or  legal  tender  notes  issued 
during  the  war  “ a debt,”  and  in  pointing  out  the  fact  that  they  only  circu- 
late rt  some  periods  by  force,  compelling  the  people  of  the  country  to  loan 
money  to  the  Government  without  interest  when  they  do  not  wish  to. 

Under  the  decision  of  the  Supreme  Court  both  the  people  and  the  Sec- 
retary of  the  Treasury  are  compelled  to  treat  the  legal  tender  notes  of  the 
United  States  as  “ lawful  money.”  Neither  that  decision  nor  the  practice 
of  the  people  in  receiving  them  can  make  these  notes  anything  but  “ fiat 
money.”  The  demand  of  the  most  crazy  Populist  or  Greenbacker  is  justi- 
fied if  it  is  in  the  power  of  the  Government  to  make  its  promises  of  dollars 
of  the  same  monetaiy  power  as  the  dollar  promised.  That  is  the  effect  of 
the  decision  sustaining  fiat  money.  Neither  that  decision  nor  any  other  can 
make  fiat  money  true  money.  The  best  definition  of  true  money  that  has 
been  given  was  given  by  Henri  Cernuschi,  the  leading  bimetallist  of  the 
world,  in  these  words  : 

“ It  is  by  the  ordeal  of  fire  that  money  may  be  tried.  The  coins  which, 
being  melted  down,  retain  the  entire  value  for  which  they  were  legal  tender 
before  they  were  melted  down,  are  good  money.  Those  which  do  not 
retain  it  are  not  good  money.” 

If  money  is  not  ’ true  it  is  bad  money.  Legal  tender  notes  are  bad 
money.  They  circulated  originally  only  by  force  of  law  without  regard  to 
equality  or  justice  except  so  far  as  the  necessity  of  the  war  justified  a 
departure  fr^m  the  ordinary  rules  of  equality  and  justice.  The  forced  loan 
collected  for  the  purchase  of  silver  bullion  cannot  be  justified  on  any  ground 
whatever.  Both  the  Bland  and  Sherman  Acts  were  a perversion  of  the 


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power  of  public  legislation  to  the  purpose  of  private  gain  at  the  instigation 
of  the  owners  of  silver  mines  and  their  representatives  in  Congress  ; them- 
selves voting  to  put  money  in  their  own  pockets  at  the  cost  of  the  people 
from  whom  they  collected  by  way  of  these  forced  loans. 

It  is  time  to  stop  mincing  matters  and  being  mealy-mouthed.  There  is 
nothing  sacred  about  the  war  greenback.  It  <lid  its  work.  That  work  is 
done.  It  is  not  doing  the  work  of  war  now.  At  is  doing  the  work  of  fraud 
under  the  law  in  forcing  a loan  without  interest  from  the  people  of  this 
country  to  the  Government,  when  the  Government  has  or  may  have  an 
ample  revenue  and  does  not  need  to  collect  a forced  loan  for  any  purpose 
whatever.  Therefore  it  follows  that  any  statement  of  the  national  account 
in  which  these  paid  or  redeemed  notes  are  counted  as  cash  in  the  Treasury 
is  not  a true  statement. 


Boston,  Mass.,  May,  1895. 


